Unreported Foreign Income to the IRS

November 4, 2020by Frontier Group


Unreported Foreign Income

A U.S Taxpayer has very specific tax and reporting requirements to the IRS. Should the taxpayer have unreported income, accounts, or assets from overseas, there are various offshore tax amnesty procedures that are available to them to either limit or eliminate penalties. However, this is only viable if the foreign income, accounts, or assets were not reported unintentionally.


Disclosing Unreported Foreign Income

As the U.S. taxes filers on their worldwide income, the taxpayer should primarily assess their foreign income sources to determine what overseas earnings they have not reported.

This applies to all U.S. Persons, whether they reside in the U.S. or overseas — and whether the income is U.S. or foreign sourced. 


Types of Unreported Foreign Income:

  • Foreign capital gains receive the same long-term or short-term treatment under US tax return as if it was a US asset.
  • If you are receiving dividends, then you may be able to obtain qualified dividends, but this depends on which country you have assets in.
  • If you are receiving foreign interest income you still report the income on your tax return, and pay U.S. tax at your ordinary tax rate; even if it is in a country which does not tax that category of passive income such as Hong Kong or Singapore.

Foreign Tax Credits:

The intent of the Foreign Tax Credit is to avoid or limit any double-taxation on foreign income you earned abroad but already paid on

You may be entitled to a foreign tax credit if you have already paid foreign taxes on your foreign income; either by filing a foreign tax return or have money withheld from your account abroad.

Filing U.S. Tax Returns

You may be able to widen your options available to you for amnesty if you have consistently been filing your US tax returns.

If you would like to discuss this further, please contact us.

Frontier Group